With a view to facilitate industrial and
manufacturing units to upgrade and expand the production capacity, the
government has allowed duty free import of over 1000 items including
spares and equipments that required for the purpose.

In order to check possible misuse of the facility,
the duty exemption has been tied up with certain conditions, which
also aim at pushing the manufacturing sector in the direction of
producing more export surplus in the country.

The textile industry already working with a large
number of used manufacturing units was demanding for financial
allocation for BMR purpose and permission to import spares and
equipment from India which is cheaper as compared to other countries.
However there was no identification of the countries for the import of
the exempted items which means the importers are free to import from
the country of their choice. In order to remove this ambiguity the
notification is required an amendment clarifying a clear position
regarding import of machinery from India.

Around 1000 different types of mechanical
appliances, transmission apparatus, plant, machinery, spare parts,
electrical equipment other relevant components used for the expansion,
balancing, modernization and replacement of industrial units or
setting up a manufacturing unit have been exempted from import duty.

The exemption would be available on the import of
such machine-tools, spare parts, sound recorders and reproducers,
machines for preparing textile fabrics etc, electrical machinery,
agricultural and harvesting machinery and accessories of all such
articles, not manufactured locally, under the rules and regulations
laid down in SRO 5540/98 of June 12, 1998.

A large number of consignments already lying at
different ports would also benefit from this scheme. Earlier the
facility was not applicable for consignments in the pipeline but this
has been extended to these items also.

The decision would release thousands of spare parts
consignments worth billions of rupees, against submission of indemnity
bond, which have been lying at various ports for clearance by the
customs authorities.

Under the notification, the importers now can claim
exemptions of custom duty on the import of the following items, which
were imported for initial setting, expansion, balancing, modernization
and replacement if not manufactured locally.

The items exempted are identified as Electric
motors and generators (excluding generating sets), electric generating
sets and rotary converters; parts suitable for the solely or
principally with the machines. Electrical transformers, static
converters for example rectifiers and inductors, electromagnets,
permanent magnets after magnetization, electromagnetic, primary cells
and primary batteries, electric accumulators, including separators
therefore whether or not rectangular) including square,
electromechanical tools for working in the hand, with self-constrained
electric motor, Electro-mechanical domestic appliances, with
self-contained electric motor, reception apparatus, insulating fitting
for electrical machines, transmission shafts and cranks, auto-matic
goods-vending machines, machines and appliances having individual
functions, office machines, machinery for sorting, screening, printing
machines, book-binding machines, lifting, handling and loading
machines, ships, derricks, cranes, boilers and other over 1000 items
specified in Chapter 84-85 of the Pakistan custom Tariff. However the
importers would be required to meet following conditions to avail this
facility. The importer would at the time of importation, by documents
in his possession, satisfy the Collector of Customs that the machinery
or spares have been imported for setting up a manufacturing unit in
bond and shall furnish an indemnity bond in the form set out below to
the extent of customs duty and sales tax exempted under this
notification.

The said indemnity bond should discharged on
production of a certificate from the Assistance Collector, Customs and
Central Excise or in the case of a unit located in Azad Jammu and
Kashmir or Northern Areas, from the Secretary, Kashmir Affairs and
Northern Affairs division or an officer authorized by him in this
behalf to the effect that the machinery of spares as declared to the
customs has been duly installed or used in the bonded premises and
such other evidences as the collector of customs may require and after
such inquiry as he deems fit in order to establish such installation.

The machinery or spares released under this
notification would not within a period of five years from the date of
filing of bill of entry for home consumption relating thereto be used
for any purpose or at any place other than for a manufacturing units
in bond. In case the condition is violated the amount of customs duty
and sales tax exempted may be imposed in this behalf shall be
recovered under section 202 of the Customs Act 1969.

The export targets have to be achieved by
industrial or manufacturing unit from the date of installation of the
machinery or equipment and upto a period of five years.